Working papers // Institute of Mathematical Economics 420
We study a communication game of common interest in which the sender observes one of infinite types and sends one of finite messages which is interpreted by the receiver. In equilibrium there is no full separation but types are clustered into convex categories. We give a full characterization of the strict Nash equilibria of this game by representing these categories by Voronoi languages. As the strategy set is infinite static stability concepts for finite games such as ESS are no longer sufficient for Lyapunov stability in the replicator dynamics. We give examples of unstable strict Nash equilibria and stable inefficient Voronoi languages. We derive efficient Voronoi languages with a large number of categories and numerically illustrate stability of some Voronoi languages with large message spaces and non-uniformly distributed types.
Cheap talk Signaling game Communication game Dynamic stability Voronoi tesselation